MUFG Bank analysts continue to see the USD / JPY pair with downside risks following aggressive Federal Reserve policy. They have a target for the pair at 104.00 with a stop loss at 1.0900.
“The Fed’s aggressive policy response has helped reduce the risk of the dollar outperforming others safe haven currencies such as JPY and CHF. This has already resulted in a rapid increase in the size of the Fed’s balance sheet to almost $ 7 trillion. “
“The recent improvement in the risk sentiment of global investors, while tensions on the financial markets have eased, has however dampened the performance of the JPY more generally. We expect the recent improvement in risk sentiment to be challenged by depression, like the release of economic data, and the slow progress in reversing the lockdowns. The JPY will benefit the most if financial market conditions deteriorate again. “
“The latest announcements of political easing from the BoJ alone are not enough to reverse the strengthening trend of the JPY.”